MARKING SCHEME 2013-14 BUSINESS STUDIES OF MARKS 66/1 …

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66/1

66/2

66/3

MARKING SCHEME – 2013-14

BUSINESS STUDIES

OUTSIDE DELHI COMPTT– 66/1

EXPECTED ANSWERS / VALUE POINTS

DISTRIBUTION

OF MARKS

1 12 7 Q. Name the level of management that is responsible for

the welfare and survival of the organisation.

Ans. Top level.

1 mark

2 11 8 Q. Why is it said that business environment is uncertain?

Ans. It is said that business environment is uncertain because

it is difficult to predict future happenings especially when

environment changes are taking place too frequently.

1 mark

3 10 9 Q. ‘Deciding in advance what to do and how to do is one

of the basic management functions.’ Give the meaning of

this function. Ans. Planning is the function being referred to.

Planning means setting objectives for a given time period,

formulating various courses of action to achieve them and

then selecting the best possible alternative from among the

various courses of action available.

(or any other correct meaning)

1 mark

4 9 10 Q. Name the type of plan which is in the form of general

statements, that guides thinking towards a particular

direction and helps in solving routine problems.

Ans. Policy

1 mark

5 8 11 Q. Distinguish between functional structure and

divisional structure on the basis of ‘formation’.

Ans. Functional structure is formed on the basis of functions

while divisional structure is formed on the basis of product

lines supported by functions.

1 mark

6 7 12 Q. What is meant by ‘formal organisation’?

Ans. Formal organisation refers to the organisation structure

which is designed by the management to accomplish a

particular task.

(or any other correct definition)

1 mark

7 6 1 Q. How does staffing improve job satisfaction and morale

of employees? State.

Ans. Staffing improves job satisfaction and morale of

employees through objective assessment and fair reward for

their contribution.

1 mark

8 5 2 Q. How does directing initiate action? State.

Ans. Other functions prepare a setting for action, directing

implements it in the organisation.

1 mark

9 4 3 Q. Give any two examples of ‘Employee Recognition’ as a

non financial incentive.

Ans. Examples of ‘Employee Recognition’ as a non financial

incentive are:

½ x 2

=1 mark

2

(i) Congratulating the employee for good performance.

(ii) Installing award or certificate for best performance.

(iii) Displaying on the notice board or in the newsletter about

the achievement of the employee.

(iv) Distributing momentos or complimentaries in recognition

of employee’s services.

(v) Rewarding an employee for valuable suggestions.

(or any other correct example)


10 3 4 Q. What is meant by ‘Management by Exception’ in the

process of controlling?

Ans. Management by Exception in the process of controlling

means that only significant deviations which go beyond the

permissible limit should be brought to the notice of the

management.

OR

Management by Exception in the process of controlling

means that an attempt to control everything results in

controlling nothing.

1 mark

11 2 5 Q. On which type of products is ISI mark used?

Ans. Electrical goods.

1 mark

12 1 6 Q. ‘The consumer has the right to acquire knowledge and

to be a well informed consumer throughout life.’

State what type of knowledge is required by the consumer

in the above stated ‘Right’.

Ans. In the above stated right, i.e. Right to Consumer

Education, a consumer should know about the rights and

reliefs available to him in case a product or service falls short

of his expectations.

1 mark

13 18 16 Q. Pawan is working as a ‘production manager’ in CFL

Ltd. engaged in manufacturing of CFL bulbs. There is no

class conflict between the management and workers. The

working conditions are very good. The company is

earning huge profits. As a policy matter, management is

sharing the gains with the workers because they believe

that prosperity of the company cannot exist for a long

time without the prosperity of the employees.

(a) State the principle of management described in the

above para.

(b) Identify any two values which the company wants to

communicate to the society.

Ans. (a) Harmony not discord which advocates that there

should be complete harmony between management and the

workers. To achieve this, Taylor called for a complete mental

revolution on the part of both management and workers.

½ mark for

identifi

cation

+

½ mark for

the statement

= ½ + ½

= 1 mark

+

1 mark for

each value

= 1 x 2

=2marks

= 1+2

3marks

3

(b) Values which the company wants to communicate to the

society are:

(i) Sensitivity towards the environment.

(ii) Good behaviour in human interaction.

(or any other correct value)

14 17 17 Q. Telco Ltd. is manufacturing files and folders from old

clothes to discourage use of plastic files and folders. For

this, they employ people from nearby villages where very

less job opportunities are available. An employee, Harish,

designed a plan for cost reduction but it was not

welcomed by the production manager. Another employee

gave some suggestion for improvement in design, but it

was also not appreciated by the production manager.


above para.

(b) Identify any two values that the company wants to


Ans. (a) Initiative. It means eagerness to initiate action

without being asked to do so.


society are:


(ii) Creation of job opportunities.

(iii) Development of backward regions.


½ mark for

identifi

cation

+

½ mark for

the statement

= ½ + ½

= 1 mark

+

1 mark for

each value

= 1 x 2

=2marks

= 1+2

3marks

15 16 14 Q. ‘Wealth maximization’ is the primary objective of

financial management. Explain.

Ans. Wealth maximisation is the primary objective of

financial management which means maximising the market

value of investment in the shares of the company. It is

possible only by:

(i) Ensuring availability of sufficient funds at reasonable cost.

(ii) Ensuring effective utilization of funds.

(iii) Ensuring safety of funds by creating reserves, re-

investment of profits etc.

3 marks

16 15 18 Q. Give the meaning of ‘Investment decision’ and

‘Dividend decision’.

Ans. Investment decision involves deciding about how the

funds are invested in different assets so that they are able to

earn the highest possible return for their investors.

Dividend decision involves deciding about how much of

profit earned by the company is to be distributed to the

shareholders and how much of it should be retained in the

business.

1 ½ + 1 ½

=

3 marks

17 14 13 Q. Give the meaning of the following money market

4

instruments:

(i) Treasury bill; and

(ii) Call money.

Ans. (i)Treasury bill

It is an instrument issued by Reserve Bank of India on behalf

of the Central government to meet its short term

requirements of funds. It is highly liquid, has an assured

yield and negligible risk of default.

(b) Call Money

It is the method by which banks borrow from each other to be

able to maintain the cash reserve ratio. It is repayable on

demand, with a maturity period of one day to fifteen days.

1 ½ + 1 ½

=

3 marks

18 13 15 Q. ‘You don’t close a sale, you open a relationship, if you

want to build a long term successful enterprise.’ Identify

the communication tool used by the marketer. State any

two features of this communication tool.

Ans. Personal selling.

Features of personal selling are:

(i) It involves a direct face to face dialogue.

(ii) It allows salespersons to develop personal relationships

with prospective customers.

1 mark for

identification

+

1 mark for

each

statement

=1x2

2 marks

=1+2

3marks

19 - - Q. Explain any four characteristics of co-ordination.

Ans. Characteristics of co-ordination are: (Any four)

(i) Integrates group efforts.

(ii) Ensures unity of action.

(iii) Continuous process.

(iv) Pervasive function.

(v) Responsibility of all managers.

(vi) Deliberate function.

(if an examinee has not given the headings as above but

have given the correct explanations, full credit should be

given)

½ mark for

heading

+

½ mark for

explan-

ation

= 1x4=

4 marks

20 - - Q. ‘The Indian corporate sector has come face to face

with several challenges due to government policy changes

in business and industry. Explain any four such changes.

Ans. Impact of government policy changes on business and

industry: (Any four)

(i) Increasing competition

(ii) More demanding customers

(iii) Rapidly changing technological environment

(iv) Necessity for change

(v) Need for developing human resources.

(vi) Market orientation

(vii) Loss of budgetary support to the public sector.

½ mark

for the

heading

+

½ mark

for each

explan

ation

= 1 x 4

=4marks

5

(If an examinee has not given the headings as above but

has given the correct explanation, full credit should be

given)

21 - - Q. How does planning ‘Lead to rigidity’ and ‘Reduce

creativity’? Explain.

Ans. Planning leads to rigidity because:

Plan is drawn with specific targets within a specific time

frame

Once the plans are drawn, the managers may not be able

to change them

Planning reduces creativity because:

It is an activity done by the top management; middle

management and other decision makers are not allowed to

deviate from the plans.

As a result, initiative and creativity inherent in them gets

lost or reduced.

(If the student has given the answer in a paragraph,

covering the above points, full credit is to be given)

2 + 2

=

4 marks

22 - - Q. What is meant by ‘Consumer Protection’? Also state

how consumer protection is important from the point of

view of consumers.

Ans. Consumer Protection means protection of consumers

from unscrupulous, exploitative and unfair trade practices.

Importance of Consumer protection for consumers is due to:

1. Consumers being ignorant about their rights and reliefs

available to them.

2. Consumers being unorganised.

3. Consumers being widely exploited by unfair trade

practices.

(If an examinee has given only the headings, ½ mark for

each heading should be awarded)

1 + 3

=

4 marks

23 - - Q. State the benefits of training to the organisation.

Ans. Benefits of training to the organisation :

(a) It avoids wastage of efforts and money by systematic

learning of skills.

(b) It enhances employee productivity leading to higher

profits.

(c) It equips the future manager who can take over in case of

an emergency.

(d) It reduces absenteeism and employee turnover by

increasing employee morale.

(e) It helps in obtaining an effective response to a fast

changing environment.

1 x 5

=

5 marks

6



24 - - ‘Controlling is an indispensable function of management.’

Explain this statement with the help of any five points.

Ans. Controlling is an indispensable function of management

as: (Any five)

1. It helps in accomplishing organisational goals.

2. It helps in making efficient use of resources.

3. It ensures order and discipline.

4. It improves employee motivation.

5. It helps in judging accuracy of standards.

6. It facilitates co-ordination in action.


has given the correct explanation, no marks should be

deducted)

½ mark for

heading

+ ½ mark for

explanation

= 1 x 5

=5marks

25 - - Q. Differentiate between ‘Capital Market’ and ‘Money

Market’ on the following basis:

(i) Expected Return

(ii) Security

(iii) Liquidity

(iv) Duration; and

(v) Instruments

Ans. DISTINCTION BETWEEN CAPITAL MARKET

AND MONEY MARKET

Basis CAPITAL

MARKET

MONEY

MARKET

(i) Expected

return

The investment in

capital markets

generally yields a higher return.

The expected rate

of return of the

money market is less.

(ii) Security

Capital market

instruments are riskier both with

respect to returns

and principal

repayment.

Money market

instruments are generally much

safer with a

minimum risk of

default.

(iii) Liquidity Capital market

securities are comparatively

less liquid.

Money market

securities are comparatively

more liquid.

(iv) Duration

The capital

market deals in

Money market

deals in short term

1 x 5

=

5 marks

7

medium and long

term securities.

securities having a

maximum tenure

of one year.

(v)

Instruments

Instruments traded

are shares,

debentures and

bonds.

Instruments traded

are treasury bill,

commercial paper,

certificates of

deposit, call money

and commercial bill,

26 - - Q. There are a number of factors that affect the fixation

of price of a product. State any five such factors.

Ans. Factors that affect the fixation of price of a product are:

(Any five)

(i) Product cost determines the minimum level at which the

product can be sold.

(ii) Utility and demand set the upper limit of the price which

the buyer would be prepared to pay.

(iii) In lesser competition, the price will tend to reach the

upper limit while in free competition; the price will tend to be

set at a lower level.

(iv) Government can intervene and regulate the price by

declaring the product as an essential product.

(v) In case the objective of the enterprise is maximizing

profits, obtaining market share leadership or surviving in a

competitive market, price will be set at a lower level while if

the objective is product quality leadership, price will be set

higher.

(vi) Uniqueness of marketing methods used like distribution

system or quality of salesman employed give freedom to the

company in setting the price.

1 x 5

=

5marks

27 29 29 Q. Besides ‘Effective management’ and ‘Employee

development’, delegation helps the organisation in

different ways. Explain any four such ways.

Ans. Besides ‘Effective management’ and ‘Employee

development’, delegation helps the organisation in:

(i) Motivation of employees.

(ii) Facilitation of growth.

(iii) Better co-ordination.

(iv) Creation of management hierarchy.


½ mark for

heading

+ 1 mark

for

explanation

= 1 ½ x 4

=

6marks

8


given)

Or

Q. ‘Decentralisation is an important philosophy that

implies selective dispersal of authority.’ In the light of this

statement, explain any four points of importance of

decentralization.

Ans. Decentralisation is an important philosophy that implies

selective dispersal of authority. In the light of this statement,

decentralization is important as it: (Any four)

(i) Develops initiative amongst subordinates.

(ii) Develops managerial talent for the future.

(iii) Leads to quick decision making.

(iv) Gives relief to top management.

(v) Facilitates growth.

(vi) Facilitates better control.



given)

OR

½ mark for

heading

+ 1 mark

for

explanation

= 1 ½ x 4

=

6marks

28 30 30 Q. ‘The functions and performance of the supervisor are

vital to an organisation because he is directly related with

the workers whereas other managers have no direct touch

with bottom level workers.’ In the light of this statement,

explain any four functions of a supervisor.

Ans. The functions and performance of the supervisor are

vital to an organisation because he: (Any four)

(i) Maintains day to day contact.

(ii) Links the workers and the management.

(iii) Helps in maintaining group unity.

(iv) Ensures performance of work.

(v) Provides on the job training.

(vi) Builds high morale amongst the workers.

(vii) Gives feedback.



deducted)

OR

Q. Describe personal barriers to effective

communication.

Ans. Personal barriers to effective communication are:

(i) Fear of challenge to authority.

½ mark for

heading

+ 1 mark

for

explanation

= 1 ½ x 4

=

6marks

OR

½ mark for

each heading

+

1 mark for

each

explanation

9

(ii) Lack of confidence of superior on his subordinates.

(iii) Unwillingness to communicate.

(iv) Lack of proper incentives.

=

1 ½ x 4

=

6 marks

29 28 27 Q. Explain how the following factors affect the working

capital requirements of a business:

(i) Inflation

(ii) Business cycle

(iii) Level of competition; and

(iv) Nature of business

Ans. Factors affecting the requirements of working capital:

(i) Inflation

During inflation, larger working capital is required to

maintain a constant volume of production and sales.

(ii) Business cycle

In case of boom, larger working capital is required as the

sales and production are more.

(iii) Level of competition

Higher competition requires larger stocks to meet urgent

orders from customers and thus higher working capital.


Trading organisations require lesser working capital than

manufacturing organisations as there is no processing

involved; service industries require the least working capital

as they do not have to maintain inventory.

OR

Q. Explain any four factors affecting the choice of capital

structure of a company:

Ans.

Ans. Following are the factors affecting the choice of capital

structure of a company: (any four)

1. Cash flow position

2. Interest coverage ratio

3. Debt service coverage Ratio

4. Return on Investment

5. Cost of debt

6. Tax rate

7. Cost of equity

8. Floatation costs

9. Cost

10. Fixed operating costs

11. Risk consideration

12. Flexibility

1 ½ x 4

=

6 marks

OR

½ mark for

heading

+ 1 mark

for

explanation

= 1 ½ x 4

=

6marks

10

13. Control

14. Regulatory framework

15. Stock market conditions

16. Capital structure of other companies


has given the correct explanations, full credit should be

given)

30 27 28 Q. Describe the role of ‘Public Relations’ in the

promotion of products and services.

Ans. Role of Public Relations in the promotion of products

and services: (Any four)

(i) Press Relations.

(ii) Product Publicity.

(iii) Corporate Communication.

(iv) Lobbying.

(v) Counselling.

(If an examinee has not given the headings but has given

the correct explanation, full credit should be given)

OR

Role of Public Relations in the promotion of products and

services:

(i) Smooth functioning of business.

(ii) Image building.

(iii) Launching new products.

(iv) Helps in facing adverse publicity.

(v) Supplement to advertising.

(vi) Satisfying interest of different public groups.



OR

Q. Explain the four important elements of marketing

mix.

Ans. The four important elements of marketing mix are:

(i) Product mix (ii) Price mix, (iii) Place mix, and (iv)

Promotion mix.

1. Product Mix:

Product mix relates to decisions regarding planning,

developing and producing the right type of products and

services for the consumers.

It includes branding, labelling, trademark and packaging.

½ mark for

each heading

+

1 mark for

each

explanation

= 1 ½ x 4

=

6marks

OR

½ mark for

each heading

+

1 mark for

each

explanation

= 1 ½ x 4

=

6marks.

11

2. Price Mix:

Price Mix involves different Pricing Methods, Pricing

strategies, Pricing Policies and Price Changes.

3. Place Mix:

Place or Physical Distribution mix includes activities that

make firm’s products available to the target customers. It

consists of all the activities involved in transferring

ownership and physical possession of the product to the

consumers.

4. Promotion Mix:

Promotion mix consists of all the activities aimed at

persuading customers to buy the product through advertising,

personal selling, sales promotion and publicity.

12

66/1

66/2

66/3


BUSINESS STUDIES



DISTRIBUTION

OF MARKS

12 1 6 Q. ‘The consumer has the right to acquire knowledge

and to be a well informed consumer throughout life.’

State what type of knowledge is required by the

consumer in the above stated ‘Right’.



reliefs available to him in case a product or service falls

short of his expectations.

1 mark



1 mark



Ans. Management by Exception in the process of

controlling means that only significant deviations which go

beyond the permissible limit should be brought to the notice

of the management.

OR




1 mark

9 4 3 Q. Give any two examples of ‘Employee Recognition’ as

a non financial incentive.

Ans. Examples of ‘Employee Recognition’ as a non

financial incentive are:



(iii) Displaying on the notice board or in the newsletter

about the achievement of the employee.

(iv) Distributing momentos or complimentaries in

recognition of employee’s services.




½ x 2

=1 mark




1 mark

7 6 1 Q. How does staffing improve job satisfaction and

morale of employees? State.



their contribution.

1 mark

13




particular task.


1 mark






1 mark




Ans. Policy

1 mark



this function.

Ans. Planning is the function being referred to.






1 mark

2 11 8 Q. Why is it said that business environment is

uncertain?

Ans. It is said that business environment is uncertain

because it is difficult to predict future happenings especially

when environment changes are taking place too frequently.

1 mark



Ans. Top level.

1 mark










1 mark for

identification

+

1 mark for

each statement

=1x2

2 marks

=1+2

3marks


instruments:


(ii) Call money.

1 ½ + 1 ½

=

14


It is an instrument issued by Reserve Bank of India on

behalf of the Central government to meet its short term



(b) Call Money

It is the method by which banks borrow from each other to

be able to maintain the cash reserve ratio. It is repayable on


3 marks









business.

1 ½ + 1 ½

=

3 marks






possible only by:

(i) Ensuring availability of sufficient funds at reasonable

cost.




3 marks

14 17 17 Q. Telco Ltd. is manufacturing files and folders from

old clothes to discourage use of plastic files and folders.

For this, they employ people from nearby villages where

very less job opportunities are available. An employee,

Harish, designed a plan for cost reduction but it was not

welcomed by the production manager. Another

employee gave some suggestion for improvement in

design, but it was also not appreciated by the production

manager.


above para.






½ mark for

identifi

cation

+

½ mark for the

statement

= ½ + ½

= 1 mark

+

1 mark for

each value

= 1 x 2

=2marks

= 1+2

3marks

15

society are:






Ltd. engaged in manufacturing of CFL bulbs. There is

no class conflict between the management and workers.

The working conditions are very good. The company is






above para.





workers. To achieve this, Taylor called for a complete

mental revolution on the part of both management and

workers.


society are:




½ mark for

identifi

cation

+

½ mark for the

statement

= ½ + ½

= 1 mark

+

1 mark for

each value

= 1 x 2

=2marks

= 1+2

3marks

- 19 - Q. What is meant by ‘coordination’? Explain why

coordination is important in an organization.

Ans. Meaning of Coordination

Coordination is the process by which activities of different

departments are synchronized to ensure unity of action.

( or any other correct meaning)

Importance of Coordination:

(i) Growth in size

(ii) Functional Differentiation

(iii) Specialisation



given)

1 mark

+

½ mark for

naming

+

½ mark for

explanation

= 1 x 3

=1+3

=4 Marks

- 20 - Q. Explain any four features of business environment.

Ans. Features of business environment( Any four):

(i) Sum total of external forces

(ii) Includes Specific and General forces

½ mark for

16

(iii) Inter-related forces

(iv) Dynamic

(v) Uncertain

(vi) Complex

(vii) Relative



given)

naming

+

½ mark for

explanation

= 1 x 4

=4 Marks

- 21 - Q. ‘ Process of planning involves certain logical steps.’

Explain the first four steps of this process.

Ans. Steps in the process of planning:

(i) Setting objectives

(ii) Developing premises

(iii) Identifying alternative courses of action

(iv) Evaluating alternative courses



given)

½ mark for

naming each

step

+

½ mark for

explanation

= 1 x 4

=4 Marks

- 22 - Q. State with the help of any four points why it is

important for a business to lay emphasis on consumer

protection.

Ans. It is important for a business to lay emphasis on

consumer protection because: (Any four)

(i) It is in the long-term interest of business to satisfy their

customers.

(ii) It is because the business uses society’s resources and

thus has a responsibility to supply products or services

which are in public interest.

(iii) It is because the business has social responsibility

towards various interest groups.

(iv) It is the moral duty of a business to take care of

customer’s interest and avoid their exploitation..

(v) It is required to avoid government intervention.



given)

1 x 4

=

4 marks

- 23 - Q. State the importance of the internal sources of

recruitment.

Ans. Importance of the internal sources of recruitment( any

five):

(a) Motivates employees as promotion at a higher level may

lead to a chain of promotions at lower levels in the

organisation.

(b) Simplifies the process of selection as the candidates are

already known to the organisation.

(c) No need for induction training as the employees are

1 x 5

=

5 marks

17

already familiar with the organisation.

(d) Helps in adjustment of surplus staff in those departments

where there is shortage of staff.

(e) Economical source of recruitment.



- 24 - Q. Explain the various steps involved in the process of

control.

Ans. Steps involved in the process of control:

(i) Setting performance standards

(ii) Measuring actual performance

(iii) Comparing actual performance with standards

(iv) Analysing deviations

Critical Point Control

Management by Exception

(v) Taking corrective action



given)

½ mark

for the heading

+

½ mark

for the

explanation

= 1 x5

=5marks

- 25 - Q. What is meant by ‘Capital Market’? Name the two

types of capital market and differentiate between the two

on any four basis.

Ans. Meaning of Capital Market

Capital Market means the facilities and institutional

arrangements through which long term funds, both debt and

equity, are raised and invested.

Types of Capital market : Primary market and Secondary

market.

Difference between Primary market and Secondary

market(any four): Basis Primary Market (New

Issue Market)

Secondary Market

(Stock Exchange)

Securities

traded

There is sale of securities

by new companies or further (new) issues of

securities by existing

companies to investors.

There is trading of

existing securities only.

Purpose

Securities are sold by the

company to the investor

directly (or through an

intermediary)

Ownership of existing

securities is exchanged

between investors. The

company is not involved

at all.

Capital

formation

The flow of funds is

from savers to investors,

i.e. the primary market

Enhances encashability

(liquidity) of securities,

i.e. the secondary market

½ mark for the

meaning

+

½ mark for

two types of

capital market

+

1 mark for

each correct

point of

difference

=1 x 4

= 4 marks

= ½ + ½ + 4

18

directly promotes capital

formation.

indirectly promotes

capital formation.

Buying/

selling

Only buying of securities

takes place in the

primary market.

Securities cannot be sold

by the investors.

Both the buying and the

selling of securities can

take place on the stock

exchange.

Price

determination

Prices are determined

and decided by the

management of the company.

Prices are determined by

demand and supply for

the security.

Location

There is no fixed

geographical location.

Located at specified

places.

=

5marks

- 26 - Q. State the factors determining the choice of channels

of distribution.

Ans. Factors determining the choice of channels of

distribution:

(i) Product related factors include nature of the product,

perishability, unit value and degree of complexity of the

product.

(ii) Company related factors include financial strength of

the company and degree of control of the company on

channel members.

(iii) Competitive factors include the policy of the company

to go with or be different from the choice of channel

selected by the competitors.

(iv) Market related factors include size of market,

geographical concentration of potential buyers and quantity

purchased.

(v) Environmental factors include prevailing economic

conditions and legal constraints.

(If an examinee has given only the heading, ½ mark for

the heading should be awarded)

1x5

=

5marks








(iv) Lobbying.

(v) Counselling.



OR

½ mark for

each heading

+

1 mark for

each

explanation

= 1 ½ x 4

=

6marks

19


services:









OR


mix.



Promotion mix.

1. Product Mix:





2. Price Mix:



3. Place Mix:





consumers.

4. Promotion Mix:


persuading customers to buy the product through

advertising, personal selling, sales promotion and publicity.

OR

½ mark for

each heading

+

1 mark for

each

explanation

= 1 ½ x 4

=

6marks.



(i) Inflation

(ii) Business cycle




20

(i) Inflation



(ii) Business cycle











OR

Q. Explain any four factors affecting the choice of

capital structure of a company:

Ans.







5. Cost of debt

6. Tax rate

7. Cost of equity

8. Floatation costs

9. Cost



12. Flexibility

13. Control






given)

1 ½ x 4

=

6 marks

OR

½ mark for

heading

+ 1 mark

for explanation

= 1 ½ x 4

=

6marks




½ mark for

heading

+ 1 mark

21









given)

Or


implies selective dispersal of authority.’ In the light of

this statement, explain any four points of importance of

decentralization.

Ans. Decentralisation is an important philosophy that

implies selective dispersal of authority. In the light of this

statement, decentralization is important as it: (Any four)









given)

for explanation

= 1 ½ x 4

=

6marks

OR

½ mark for

heading

+ 1 mark

for explanation

= 1 ½ x 4

=

6marks


vital to an organisation because he is directly related

with the workers whereas other managers have no direct

touch with bottom level workers.’ In the light of this

statement, explain any four functions of a supervisor.












deducted)

½ mark for

heading

+ 1 mark

for explanation

= 1 ½ x 4

=

6marks

OR

22

OR


communication.






½ mark for

each heading

+

1 mark for

each

explanation

=

1 ½ x 4

=

6 marks

23

66/1

66/2

66/3


BUSINESS STUDIES



DISTRIBUTION

OF MARKS

7 6 1 Q. How does staffing improve job satisfaction and

morale of employees? State.



their contribution.

1 mark




1 mark

9 4 3 Q. Give any two examples of ‘Employee Recognition’ as

a non financial incentive.

Ans. Examples of ‘Employee Recognition’ as a non

financial incentive are:



(iii) Displaying on the notice board or in the newsletter

about the achievement of the employee.

(iv) Distributing momentos or complimentaries in

recognition of employee’s services.




½ x 2

=1 mark



Ans. Management by Exception in the process of controlling

means that only significant deviations which go beyond the

permissible limit should be brought to the notice of the

management.

OR




1 mark



1 mark

12 1 6 Q. ‘The consumer has the right to acquire knowledge

and to be a well informed consumer throughout life.’

State what type of knowledge is required by the

consumer in the above stated ‘Right’.



reliefs available to him in case a product or service falls

short of his expectations.

1 mark

24



Ans. Top level.

1 mark

2 11 8 Q. Why is it said that business environment is

uncertain?

Ans. It is said that business environment is uncertain

because it is difficult to predict future happenings especially

when environment changes are taking place too frequently.

1 mark



this function.

Ans. Planning is the function being referred to.






1 mark




Ans. Policy

1 mark






1 mark




particular task.


1 mark


instruments:


(ii) Call money.


It is an instrument issued by Reserve Bank of India on

behalf of the Central government to meet its short term



(b) Call Money

It is the method by which banks borrow from each other to

be able to maintain the cash reserve ratio. It is repayable on


1 ½ + 1 ½

=

3 marks



3 marks

25




possible only by:

(i) Ensuring availability of sufficient funds at reasonable

cost.













1 mark for

identification

+

1 mark for

each statement

=1x2

2 marks

=1+2

3marks


Ltd. engaged in manufacturing of CFL bulbs. There is

no class conflict between the management and workers.

The working conditions are very good. The company is






above para.





workers. To achieve this, Taylor called for a complete

mental revolution on the part of both management and

workers.


society are:




½ mark for

identifi

cation

+

½ mark for the

statement

= ½ + ½

= 1 mark

+

1 mark for

each value

= 1 x 2

=2marks

= 1+2

3marks

14 17 17 Q. Telco Ltd. is manufacturing files and folders from

old clothes to discourage use of plastic files and folders.

For this, they employ people from nearby villages where

very less job opportunities are available. An employee,

Harish, designed a plan for cost reduction but it was not

½ mark for

identifi

cation

+

½ mark for the

26

welcomed by the production manager. Another employee

gave some suggestion for improvement in design, but it

was also not appreciated by the production manager.


above para.






society are:





statement

= ½ + ½

= 1 mark

+

1 mark for

each value

= 1 x 2

=2marks

= 1+2

3marks









business.

1 ½ + 1 ½

=

3 marks

- - 19 ‘Coordination is the essence of management.’ Explain

how.

Ans. Co-ordination is not a separate function of management.

It is the force that binds all other functions and thus called

the essence of management.

The process of coordinating the activities begins at the

planning stage in which the top management plans for the

entire organization.

At the organizing stage, the organizational structure is

developed as per plans.

The staffing function is performed thereafter as per the

structure developed in the organization structure.

Directing is then required to ensure that these plans are

executed accordingly.

Controlling function ensures that the discrepancies

between actual and planned activities are taken care of.

Coordination, therefore, synchronises the efforts through all

functions of management and ensures that the organizational

objectives are achieved with a minimum of conflict.

=4 marks

27

- - 20 Q. ‘ Understanding of environment by business

managers enables them not only to identify and evaluate,

but also to react to the forces external to their firms.’ In

light of the statement, explain any four points of

importance of business environment.

Ans. Importance of business environment(any four):

(i) Identify opportunities and get first mover advantage

(ii) Identify threats and early warning signals

(iii) Tap useful resources

(iv) Assist in planning and policy formulation

(v) Help in coping with rapid changes

(vi) Help in improving performance



given)

½ mark for

heading

+

½ mark for

explanation

= 1x4

= 4 marks

- - 21 How does planning ’Not work in a dynamic

environment’ and ‘Does not guarantee success’? Explain.

Ans. ‘Planning may not work in a dynamic environment’

The business environment is dynamic. The

organization has to constantly adapt itself to changes

in environment by making changes in its plans.

Planning cannot foresee accurately changes in the

environment and, thus, there may be obstacles to

effective planning.

‘Planning does not guarantee success’

Managers have a tendency to rely on previously tried

and tested plans. But a plan that has worked before

may not work again.

While planning, many unknown factors have to be

considered. The false of security created by planning

may actually lead to failure instead of success.

2 marks

2 marks

= 2+2

= 4 marks

- - 22 Q. State any eight reliefs available to a consumer under

the provisions of Consumer Protection Act, 1986.

Ans. Reliefs available to a consumer under the provisions of

Consumer Protection Act, 1986.

(i)To remove the defect in goods or the deficiency in

service.

(ii) To replace the defective product with a new one, free

from any defect.

(iii) To refund the price paid for the product.

(iv) To pay a reasonable amount of compensation for any

loss or injury suffered by the consumer due to negligence of

the opposite party.

(v) To pay punitive damages in appropriate circumstances.

½ mark for

each relief

= ½ x 8

=4 marks

28

(vi) To discontinue the unfair/ restrictive trade practice and

not to repeat the same in future.

(vii) Not to offer hazardous goods for sale.

(viii) To withdraw hazardous goods from sale.

(ix) To cease manufacture of hazardous goods.

(x) To pay any amount (not less than 5% of the value of the

defective goods to be credited to the Consumer Welfare

Fund or any other organisation/person, to be utilised in the

prescribed manner.

(xi) To issue corrective advertisement to neutralize the effect

of misleading advertisement.

(xii) To pay adequate costs to the appropriate party.

- - 23 Q. What is meant by ‘Training’? State the benefits of

training to the employee.

Ans. Meaning of Training

Training means the process by which attitudes, skills and

abilities of employees to perform specific jobs are increased.

Benefits of training to the employee. (Any four):

(i) It helps in promotion and career growth.

(ii) It helps him to earn more.

(iii) It reduces accidents.

(iv) It increases the morale of the employees

(v) It provides better employment opportunities



1 mark for

the meaning

+

1 mark for

each benefit

=1 x 4

= 4 marks

= 1+4

= 5 marks

- - 24 Q. Explain the relationship between planning and

controlling.

Ans. Planning and controlling are mutually interrelated and

interdependent activities because: 1. Controlling takes place on the basis of standards

developed by planning;

2. Planning without controlling is meaningless as controlling

ensures that the events conform to the plans.

3. Planning prescribes an appropriate course of action for

achieving objectives whereas controlling evaluates whether

decisions have been translated into desired actions.

4. Planning and controlling both are forward looking

5. Planning and controlling are both looking back.

(Note: If the answer covers the above points in any other

form, full credit should be given)

5 marks

- - 25 Explain any five functions of Stock Exchange.

Ans. Functions of Stock Exchange( any five):

(i) Provides liquidity and marketability to existing securities

29

(ii) Determines price of securities

(iii) Ensures safety of transactions

(iv) Contributes to economic growth

(v) Spreads Equity cult

(vi) Provides scope for speculation



given)

½ mark for

heading

+

½ mark for

explanation

= 1x5

= 5 marks

- - 26 What is meant by ‘advertising’? State the role of

advertising in marketing.

Ans. Meaning of advertising

Advertising is the paid form of non-personal communication

about a product by an identified sponser. Role of advertising in marketing( any four):

(i) Advertising helps to create demand by informing the

prospective customers about the product.

(ii) It provides economies of scale as increased demand

leads to higher production.

(iii) It educates consumers by informing about the

availability of different products in the market.

(iv) It generates employment by creating various kinds of

jobs to artists, script writers,etc .

(v) It improves standard of living by giving information

regarding new products and increasing income levels of

people.

(vi) It sustains the media by acting as a source of revenue.



1 mark

+

1 mark for

each point

=1 x 4

= 4 marks

= 1 +4 marks

=5 marks



(i) Inflation

(ii) Business cycle




(i) Inflation



(ii) Business cycle



1 ½ x 4

=

6 marks

30









OR

Q. Explain any four factors affecting the choice of

capital structure of a company:

Ans.







5. Cost of debt

6. Tax rate

7. Cost of equity

8. Floatation costs

9. Cost



12. Flexibility

13. Control






given)

OR

½ mark for

heading

+ 1 mark

for explanation

= 1 ½ x 4

=

6marks








(iv) Lobbying.

(v) Counselling.

½ mark for

each heading

+

1 mark for

each

explanation

= 1 ½ x 4

=

31



OR


services:









OR


mix.



Promotion mix.

1. Product Mix:





2. Price Mix:



3. Place Mix:





consumers.

4. Promotion Mix:


persuading customers to buy the product through

advertising, personal selling, sales promotion and publicity.

6marks

OR

½ mark for

each heading

+

1 mark for

each

explanation

= 1 ½ x 4

=

6marks.




½ mark for

heading

+ 1 mark

32









given)

Or


implies selective dispersal of authority.’ In the light of

this statement, explain any four points of importance of

decentralization.

Ans. Decentralisation is an important philosophy that

implies selective dispersal of authority. In the light of this

statement, decentralization is important as it: (Any four)









given)

for explanation

= 1 ½ x 4

=

6marks

OR

½ mark for

heading

+ 1 mark

for explanation

= 1 ½ x 4

=

6marks


vital to an organisation because he is directly related

with the workers whereas other managers have no direct

touch with bottom level workers.’ In the light of this

statement, explain any four functions of a supervisor.












deducted)

½ mark for

heading

+

1 mark

for explanation

= 1 ½ x 4

=

6marks

OR

33

OR


communication.






½ mark for

each heading

+

1 mark for

each

explanation

=

1 ½ x 4

=

6 marks

Documents

MARKING SCHEME 2013-14 BUSINESS STUDIES OF MARKS 66/1 …